February 02, 2017

Digital = Foxes ... Traditional Retail = Rabbits

If foxes eat rabbits and there aren't any rabbits, foxes go hungry. Foxes, therefore, need an ample supply of rabbits.

Those who author an "omnichannel" strategy or a "digital first" or "mobile first" strategy are viewing the world through the eyes of a fox. They're looking to find as much as they can eat as possible, and they're not worried about the long-term consequences of "eating everything".

This brings me to traditional retail.

Traditional Retail is struggling, mightily. Many will blame Amazon, but let's not do that ... Amazon is the size of maybe four Macy's brands ... which in the grand scheme of things is rather tiny. Sure, Amazon is taking business from retailers ... but not enough to blame traditional retail problems on.

Our struggles are in the realm of digital vs. traditional retail ... or foxes vs. rabbits.

Again, think of Traditional Retail as being a "rabbit". Rabbits need food ... tasty greens. So Traditional Retail works best when there is great merchandise (i.e. Merchandise Productivity) fueled by a Unique Point of View ... the combination of Merchandise/POV are the foot that allows the rabbit population to thrive.

Think of "digital" as being a "fox". Foxes need food ... namely rabbits. So "digital strategy" is most likely to work well when there are a ton of rabbits. Without the rabbits, digital strategy struggles. We know this is true, because when we close a store, the vast majority of the sales disappear - very little migrates (20%, +/-, your mileage will vary) to e-commerce. So digital (foxes) are fully dependent upon traditional retail (rabbits) for success.

As we close stores (kill rabbits), digital/e-commerce (foxes) will starve.

So what choice do we have?

We have to make our traditional stores as healthy and as plump and as plentiful as possible.

We must have merchandise that customers love (merchandise productivity).

We must have a unique point of view that attracts new customers at a low cost.

(1) and (2) are the food that allows the rabbit population to be plentiful and chubby.

With a plentiful and chubby rabbit population, there's plenty of food for foxes (digital) to consume.

We have no choice, then, but to focus our efforts on (1) and (2) if we want digital strategy to thrive.This is the opposite of "digital first" and "omnichannel" ... both of which view the world through the eyes of a fox. We need to make sure retail is hyper-healthy ... if we do that, then there is plenty of food for "digital" / "foxes" to enjoy.

Kevin Hillstrom

Kevin Hillstrom, President, MineThatData

Kevin is President of MineThatData, a consultancy that helps CEOs understand the complex relationship between Customers, Advertising, Products, Brands, and Channels. Kevin supports a diverse set of clients, including internet startups, thirty million dollar catalog merchants, international brands, and billion dollar multichannel retailers. Kevin is frequently quoted in the mainstream media, including the New York Times, Boston Globe, and Forbes Magazine.

Prior to founding MineThatData, Kevin held various roles at leading multichannel brands, including Vice President of Database Marketing at Nordstrom, Director of Circulation at Eddie Bauer, and Manager of Analytical Services at Lands' End.

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